Who Do You Hurt When You Walk Away?

Economist Luigi Zingales of the University of Chicago, also in our original story, argues there are damaging spillover effects (“negative externalities”) when homeowners strategically default.

“By walking away, not only do you damage the lenders,” Zingales said, “but you damage the community which you leave and you damage everybody else who in the future will try to borrow because the cost of borrowing will be higher.”

You can watch Florida banker Bill Valenti, who argued in Wednesday’s post that a mortgage is a moral obligation. And tomorrow we finish the series with a University of Arizona law professor who argues that walking away is the moral high road for homeowners.